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Abstract

According to Porter (1985), firms can achieve competitive advantage by
implementing a value-creating strategy that is not simultaneously being implemented
by any current or potential competitors. Strategic alliances are helping organizations
to fulfill customer demands, attain growth and become successful in the highly
competitive and dynamic corporate world. The purpose of the study was to establish
the effect of strategic alliances on competitive advantage of selected Commercial
Banks in Kenya. The study respondents were 25 top management employees from the
selected Commercial Banks in Kenya identified through purposive sampling
technique. A self - administered questionnaire was used for data collection.
Qualitative data was analysed using content analysis, through developing a thematic
framework from the key issues, concepts and themes emanating from the open ended
questions while the quantitative data was analyzed using descriptive statistics through
SPSS v.20. Thereafter, the findings were presented in the form of tables and graphs.
The study established that 50% of the respondents indicated that their banks’ decision
to form strategic alliances with other firms was so as to generate more profits while
another 28% of the respondents indicated that the decision to form strategic alliances
was so as to increase their bank’s market share. Other factors highlighted as reasons
behind the formation of strategic alliances included to reduce operational costs, to
overcome market entry restrictions and slow market penetration, for risk sharing
purposes, to achieve economies of scale, to learn new skills and knowledge, for sociopolitical
factors/considerations, to increase efficiency and quality of services and for
blocking a competitive threat. The study also found out that the existing strategic
alliances had a significant influence on the banks’ competitive advantage. The study
concluded that commercial banks in Kenya engaged in various kinds of strategic
alliances including joint research and development, outsourcing, long-term supply
arrangements, joint marketing ventures, franchises, mergers, acquisitions and joint
ventures so as to bolster their competitive edge through the synergies and other
benefits attributable to the strategic alliances. The study recommended that the banks
should form strategic alliance driven by the need to differentiate their products and
services within one or a number of target market segments. Use of strategic
partnerships geared towards differentiated strategy would help the banks to gain more
competitive advantage compared to their competitors in terms of market capture. The
study further recommended that the banks’ management should initiate an appraisal
of all the strategic alliances entered into with other firms with a view of identifying
the most important limiting factors impeding their successful implementation in order
to ensure that the constraints are systematically addressed so that the banks can leap
optimal benefits of the strategic alliances.